San Mateo investor buys Rafael Town Center in San Rafael for $50 million

By Megan Hansen, The Marin Independent Journal,

Posted:
02/26/2014 08:38:19 AM PST

Updated:
02/26/2014 08:38:20 AM PST

A San Mateo-based real estate investor has purchased the Rafael Town Center - a mixed-use residential and commercial property on Fourth Street in San Rafael - for $50 million.

This is the second Marin County purchase by JB Matteson, Inc., a private real estate investment manager that invested $190 million in multifamily property acquisitions or investments last year. In 2012, the company purchased the 124-unit apartment and commercial Millworks property in Novato.

The Rafael Town Center - which has 133 apartments, 41,783 square feet of office space and 20,312 square feet of street-level retail shops - was built in 2002 by James Schafer of the Kentfield-based Samuel Schafer company and underwent a $3.6 million renovation in the past two years. JB Matteson officially acquired the property on Feb. 21 from an investment account managed by Stockbridge Real Estate Funds, according to JB Matteson. The property was owned by Colliers International, a real estate firm in San Francisco.

Matt Matteson Jr., president of Matteson Realty Services, said JB Matteson, the multifamily division of the Matteson Companies, has been eying the Rafael Town Center for some time, actually trying to acquire the property before the most recent owners bought it.

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"This property captures a lot of what we think is going to do very well there because we can not only offer nice apartments, but office space and unique retailers," Matteson said. "We like downtown San Rafael very much."

Part of the complex's draw is its location in the heart of the city and the fact that it offers restaurants, shopping, personal services such as beauty salons and public transportation all within walking distance. Matteson said this type of synergistic development is desirable for the tenants he caters to.

San Rafael City Councilman Andrew McCullough said he's pleased to hear the investment firm values San Rafael and the efforts the city has made to make the downtown area better.

"It's a vote of confidence in our downtown. It vindicates the work done in the last 15 years to take the old Macy's and J.C. Penney sites and create mixed use," McCullough said.

Court Street used to be completely open between Fifth Avenue and Fourth Street before the city built a community plaza with a fountain in conjunction with the Samuel Schafer company's construction of the Rafael Town Center. The Macy's and J.C. Penney stores that used to be on the corner were demolished in the late 1990s to make way for the mixed-use complex and city plaza.

San Rafael Planning Manager Paul Jensen said the demolition was part of a strategy to revamp the area and promote mixed-use construction after the retailers left the buildings vacant.

"We had a downtown vision - and that was a huge process to revamp the zoning and a lot of the policies downtown to promote housing," Jensen said.

The Rafael Town Center complex is the investment firm's seventh recent acquisition in California, adding to its portfolio of properties in Novato, Sacramento, Orange County, Los Angeles, Ventura and Upland. Most of the properties have been developed within the last 10 years and are located in infill locations in major coastal markets from Southern California to Seattle, Wash.

Rafael Town Center residents live in a mix of studio, one- and two-bedroom apartments averaging 620 square feet in the six-story complex, with retail shops on the ground floor and a three-level parking garage for all tenants. The five-story office portion of the center has 20 suites ranging from 1,500 to 5,000 square feet that are 92 percent leased by tenants such as Presidio Bank and Midwest Agri-Commodities.

Retailers on the ground floor have use of an outdoor seating area in the city's central plaza right off of Fourth Street. Tenants include Mountain View Vintners, Mr. Pickle's Sandwich Shop, Coldstone Creamery, Lime Wireless, Arizmendi Bakery, Barney's Gourmet Hamburgers and Opus Bank.

The entire center was renovated during the past two years to include more energy-efficient equipment, a revamped leasing center, a new community room, a new business center and a new fitness center. The private courtyard received upgraded modern patio furniture, a fire pit and a stainless steel barbecue.